CrowdStrike CRWD shares have soared over 50% since last Monday and it topped our Q4 fiscal 2020 earnings and revenue estimates on March 19. The cybersecurity firm also provided upbeat guidance amid the ongoing coronavirus economic downturn that has forced many to work remotely, if they can.
CrowdStrike’s Elevator Pitch
CrowdStrike was founded in 2011 and went public in June 2019. The firm focuses on cloud-delivered endpoint protection “built to stop breaches.” CRWD aims to protect workloads “across on-premise, virtualized, and cloud-based environments running on a variety of endpoints such as laptops, desktops, servers, virtual machines, and Internet of Things, or IoT, devices.”
Recent Financial Result Highlights
Last week, the cybersecurity company reported a much smaller-than-expected adjusted Q4 loss (-$0.02 vs. -$0.08), which also marked a huge improvement against Q4 FY19’s -$0.60 a share. CrowdStrike also saw its total fiscal 2020 revenue skyrocket 93%, with subscription sales up 99%.
The firm’s free cash flow came in at $12.5 million, against 2019’s negative $65.6 million. Plus, CrowdStrike has attracted larger clients to its SaaS subscription-based model.
The company added 870 net new subscription customers in Q4, to end the fiscal 2020 with roughly 5,400 customers. This marked a 116% expansion from a year ago and CrowdStrike noted that its “subscription customers that have adopted five or more cloud modules increased to 33%.”
CEO George Kurtz noted on CrowdStrike’s earnings call with analysts that it was landing more large customers that start with “ARR over $1 million.” Kurtz also detailed why the firm feels that it is well position both long-term and for the coronavirus selloff. “Cybersecurity is mission critical to both the public and private sector,” the chief executive told analysts last week.
“Endpoint or workload security is also essential to protecting a remote workforce. While the impact to the macroeconomy from the coronavirus is unfolding in real time, we know it is forcing companies to conduct business differently and rapidly shift to a remote workforce. With our cloud native platform, our lightweight agent that is easily deployed at scale and our frictionless go-to-market engine, CrowdStrike is uniquely positioned to meet their cybersecurity needs."
As we said at the top, CRWD shares have soared roughly 56% over the last week, from $33 on March 16 to close regular trading Monday at $51.45 a share. This uptick came as the Dow, the S&P 500, and the Nasdaq all continued their historically quick selloffs, as Apple AAPL and other giants fall.
Despite the recent surge, CrowdStrike stock still rests 50% below its 52-week highs of just over $100 per share that it hit in August 2019.
CrowdStrike’s longer-term earnings revision picture has turned more positive since it posted its results last week. This positivity helps CRWD boast a Zacks Rank #1 (Strong Buy) at the moment. The stock also holds a “B” grade for Growth in our Style Scores system.
Investors should also be happy to know that the firm provided conservative guidance to help account for the coronavirus. Yet, it still came in above Wall Street estimate, and CFO Burt Podbere said that CrowdStrike “derisked” its guidance and that it “pipeline is at record levels.”
Our Zacks estimates call for the company’s fiscal 2021 revenue to surge nearly 40% to reach $667.79 million. Peeking further ahead, CrowdStrike’s 2022 sales are projected to climb another 30% higher to $862.86 million.
At the bottom end of the income statement, CRWD’s adjusted fiscal year loss is expected to be cut in half from -$0.42 to -$0.21 a share. Then it looks set to race near adjusted profitability in FY22, with the firm expected to post an adjusted loss of just -$0.02 a share.
The company also looks somewhat immune to the coronavirus selloff because as firms big and small start to work remotely, their cybersecurity concerns won’t go away—in fact, they will likely grow. CrowdStrike also clearly looks poised to grow in the long run as part of the growing cybersecurity industry.
And CRWD might be worth considering as part of a larger group of stocks that could benefit from the stay-at-home world we are currently living in. This list includes Zoom Video Communications ZM, Netflix NFLX, Amazon AMZN, and others.
With that said, the market looks set to remain volatile, so even those high on CRWD should practice caution and not take too large of a position.
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